The Value of ERP for Supply Chain Management
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The Value of ERP for Supply Chain Management

A common complaint about ERP is that it costs way too much. Understandably, the cost of ERP can be very high, however, businesses already are spending about 25 percent of their budget on supply chain management. Since ERP can manage business processes like accounting, inventory and supply chain management, wouldn’t it make more sense to put that 25 percent towards ERP? Below are 6 benefits of using ERP to manage your supply chain.

  1. Demand

    An ERP system for supply chain management will automatically create demand when orders are received and be able to create accurate delivery dates from real-time data. Further, using data the system will be able to determine when high demand seasons are and prepare for it.

  2. Planning

    ERP makes supply chain management easier by creating job scheduling based off of the orders in the system. The planning module of ERP can also make inventory more accurate by planning out the materials needed for each order.

  3. Procurement

    The ERP system can automate many previously manual tasks such as communicating with suppliers and keeping track of those communications. The ERP system can ensure that all supplies or raw materials needed are delivered from the supplier on time.

  4. Production

    The ERP system creates a bill of material for each item needed to be made. Following production, all records including labor and quality are created in real time.

  5. Shipment

    All shipping documents and records are recorded through the ERP system for proper supply chain management, eliminating mistakes that occur when the process is done manually. The system can ensure that items are sent out in time to be delivered on the due date.

  6. Invoicing

    Once the item has been shipped, the ERP system can create an invoice that is matched to the purchasing order and finally sent to the customer. Keeping these documents in the ERP system, rather than on physical paper, eliminates forgotten invoices and increases cash flow.

The entire supply chain management process can be taken care of through the ERP system. Many processes that used to be done manually are now taken care of electronically, which minimizes error and missing documents. From sales to accounting, each business process is taken care of. So where is the money better spent, strictly on the supply chain or in a new ERP system?

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